Using your car for work and claiming for passengers

Source: HM Revenue & Customs | | 30/08/2017

Do you use your own car for business purposes? If so, you may be able to claim a tax-free allowance from your employer known as a Mileage Allowance Payment or MAP. The allowance is paid when employers use their own car, van, motorcycle or bike for work purposes. It is important to note that this tax-free allowance is not available for journeys to and from work, but is available to employees who use their own vehicles to do other business-related mileage.

Employers usually make payments based on a set rate per mile depending on the mode of transport used. There are approved mileage rates published by HMRC, and if these rates are not exceeded, any payments received are tax-free. For cars, the approved mileage allowance payment for the first 10,000 business miles is 45p per mile and 25p per mile for every additional business mile. An equivalent payment of 20p per mile is available for bicycle travel and 24p per mile for motorcycle travel. Where an employer pays less than the published rates, the employee can make a tax relief claim for the shortfall using mileage allowance relief.

Planning note:

A less well-known fact is that if you travel with business colleagues you can claim an additional 5p per passenger per business mile for each qualifying passenger. The passengers must be employed by, or be an officer of the business. So, if you have brought a colleague on a business trip, don’t forget to make a claim. Unlike the MAP, if your employer pays you less than 5p per mile to carry a passenger, you cannot claim any tax relief on the difference.



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